Pension Mode SMSF

When you start a Transition to Retirement income stream (a pension while you still work), there are certain minimum amounts to withdraw. The maximum amount is 10% of the account balance.

Depending on your age, you must withdraw a minimum amount from your Account based Pension each year. Due to the economic effects of COVID-19, the government has halved the percentage of minimum pension payments for the 2020, 2021, 2022 and 2023 financial years.

See the table below for percentages linked with different age categories:

Age of recipient Percentage Factor (2020/2021/2022/2023)
Under 65 2%
65 – 74 2.5%
75 – 79 3%
80 – 84 3.5%
85 – 89 4.5%
90 – 94 5.5%
95 or more 7%

 

With the global financial crisis in 2009, the minimum percentages were lowered. This enabled Members to preserve more capital in the SMSF. The historical minimum percentages are set out below:

 

Age Previous Year Percentage Factors
2008 FY 2009 -2011 FY 2012-2013 FY 2014-2019 FY
Under 65 4% 2% 3% 4%
65-74 5% 2.5% 3.75% 5%
75-79 6% 3% 4.5% 6%
80-84 7% 3.5% 5.25% 7%
85-89 9% 4.5% 6.75% 9%
90-94 11% 5.5% 8.25% 11%
95 or more 14% 7% 10.5% 14%

1.       The 4% minimum is the normal percentages that apply for minimum pension draw down

2.       Minimum amount calculated on 1 July each year for the transition to retirement regular payment

3.       In the first year of  the account-based income stream, work out the minimum payment pro-rata on effective days in the year

4.       Minimum amount to be rounded to nearest $10

5.       These minimum amounts are set out in the Superannuation Legislation

To start a Pension or Transition to Retirement, Trustees need to minute this decision. Please see a template of a pension commencement minute below

To read more on Pension payments from an SMSF, read the ATO booklet here:

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